CVS sued Tennessee state officials on May 22 to block legislation that the pharmacy giant said would force the chain to close 136 Tennessee pharmacy locations.
CVS filed the lawsuit in U.S. District Court in Nashville after Tennessee Gov. Bill Lee signed legislation banning companies from owning both pharmacy benefit managers and retail pharmacies. The Tennessee law will take effect July 1, 2028.
CVS employs more than 2,000 people in 134 retail pharmacy locations and two specialty pharmacies in Tennessee, providing health services and medications for people with complex conditions such as cancer and multiple sclerosis. The company also owns pharmacy benefits manager CVS Caremark.
“We will pursue all options to continue providing pharmacy and health care services to our 1.5 million Tennessee pharmacy patients,” CVS spokeswoman Amy Thibault said. “This unconstitutional law prioritizes patients’ special interests and local politics, restricts their access to life-saving medicines and undermines fair competition.”
What are PBMs and why are they under fire?
Pharmacy benefit managers, or PBMs, have faced bipartisan scrutiny across the country as Congress and states take aim at prescription drug prices and corporate health giants. PBMs act as intermediaries between drug manufacturers, health insurance companies, and retail pharmacies. Health insurers and employers that provide health insurance benefits use PBMs to negotiate prices and manage prescription drugs.
Senators Elizabeth Warren, D-Massachusetts, and Josh Hawley, R-Missouri, this month re-introduced federal legislation that is similar to the Tennessee law. The bipartisan bill would block companies that are owned by a PBM or insurance company from owning pharmacies.
What supporters of the law say
The Tennessee law addresses the “huge conflicts of interest” that arise when large companies control pharmacies and PBMs or insurers, said B. Douglas Hoey, CEO of the National Community Pharmacists Association, which represents independent pharmacies.
“This legislation simply gives these health care giants a choice – you can be a PBM or you can be a pharmacy but you can’t be both,” Hoey said in a statement.
Thibault said the Tennessee law targeting CVS raises prescription drug costs for employers and will not lower prescription drug costs for anyone.
The lawsuit names the Tennessee Board of Pharmacy, Tennessee Attorney General Jonathan Scrametti and 10 pharmacy board officials as defendants. The lawsuit asks a federal judge to find that the law violates federal laws and stop the state from enforcing it.